A temporary zero rate of VAT for qualifying supplies of electricity in Great Britain (England, Scotland and Wales) applies from 1 October 2026 to 31 March 2027. The reduced rate of VAT of 5% continues to apply to qualifying supplies of electricity in Northern Ireland. 

The policy was first announced in July 2026 and has since been enacted by the Value Added Tax (Supplies of Domestic Electricity) Order 2026 (SI 2026/987). HMRC has published guidance on applying the temporary zero rate of VAT in Revenue & Customs Brief 10 (2026). 

Qualifying supplies 

In the Brief, HMRC says that no changes have been made to the supplies that qualify for relief, with the result that supplies of electricity in Great Britain that would have qualified for the reduced rate of VAT will be charged at 0% during the relevant period.  

Guidance on supplies that would have qualified for the reduced rate is provided in VAT Notice 701/19. Key points include that: 

• qualifying use means domestic use or non-business use by a charity (paragraph 3.1);
• de minimis supplies of electricity are treated as being made for domestic use in some circumstances (paragraph 3.2.2); and
• where there is both qualifying and non-qualifying use, an apportionment is required unless 60% or more of the fuel or power is for qualifying use, in which case the whole supply can be treated as for qualifying use (paragraph 5.2).  

Time of supply 

HMRC says that where a billing period includes 1 October 2026, suppliers may determine the VAT liability of supplies based on the date the energy is consumed. HMRC recommends that meter readings are used to do this but will accept the use of other methods if they produce a fair and reasonable outcome.  

HMRC advises suppliers to “keep clear records of when they apply the reduced rate and account for any adjustments in line with the normal VAT accounting rules”.